May 11, 2009

The Objective of Saving Money for a Rainy Day

Posted in saving tips at 7:53 pm by kimsan23

Why did my parents always remind me to save money?  The answer was always: “Save for a rainy day.”

I  always thought it was very simple.   I fell into the trap of thinking that I was only saving for one purpose: retirement.

What are we saving for?  What are those rainy days?  Today I’m going to try my best to detail what those are so that we aware of the “more than one thing” we need to save for aside from our retirement.

The Essentials:

  1. Retirement: Everyone knows we need to save for this.  When we get old are are no longer able to work, it would be best to have enough money to spend until the end of our days.
  2. Medical Emergencies: If you don’t have medical insurance, it’s time to invest in that as well as set up an emergency medical fund.  It helped that my partner and I had medical insurance and savings specially when we both got very sick at the same time.  We were unable to report for work and were confined to stay at home.  One of our bank accounts dedicated to medical and household expenses surely helped us along the way.  My medical insurance did not cover medication if I stayed at home so we had to spend on that using our emergency fund.  Soon though, we will separate the emergency fund from the other funds to make sure we know exactly how much we have to spare in case of any medical emergencies.
  3. Household Maintenance:  Our homes depreciate too.  Every time you need to spend for repairs, it is wise to take it our of a fund that is meant for just that.  This has been very useful especially during times after heavy rains or floods.
  4. Automobile Maintenance:  Owning a car is like owning a small house.  It is important to spend some money on it’s maintenance so that it’s always in tip top condition.  Cars will last longer if maintained on a regular basis following it’s maintenance schedule.
  5. Family Emergencies: If you need to help a family member during a financial crisis, this is a good fund to set up.  Remember, sharing our blessings attracts good karma!
  6. Unemployment or Economic Crises: Be prepared for anything and everything related to losing your current job or source of income.  Put away as much money as you can and make sure you have at least a buffer fund that will support your lifestyle for at least 3 months if you are put out of work or if your business does not pan out well.  You will have 3 months to find another source of income and at the same time live comfortably.

The Extras: (rewards when we have some extra money)

  1. Travel
  2. Sports & Hobbies
  3. Other Entertainment

It’s always wise to be prepared for emergencies as well as occassionally reward ourselves when things are going great.  This system also prevents you from over spending on the “Extras” and focusing on the “Essentials.”

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2 Comments »

  1. dpearcelewis said,

    You hit the nail on the head !!… I like this list because it is all very true…

    • kimsan23 said,

      Thanks for dropping by!


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